Welcome to Business Outlook
Related Articles
Asia coal price has skyrocketed to a new record amidst signs of a further price hike next year which is ominous for Bangladesh to be locked into energy crisis already crippling the country.
High liquefied natural gas and diesel prices have already compelled Bangladesh to suspend electricity production at many power plants run by the two fossil fuels, leading to a rotating power outage – 19 hours a day at places.
With very limited renewable electricity capacity, top officials of the incumbent government, including state minister for power Nasrul Hamid, expected the ongoing electricity crisis to ease with new coal-based power plants coming online soon.
Coal-based electricity worth 3,000MW is expected to be added in December, according to the power situation progress report for August, the latest one released by the Power Development Board.
The 1,320MW coal-fired Rampal power plant was inaugurated on Tuesday with its first unit scheduled to begin operation in December.
With only four months left before new coal-fired power plants coming online in December, Asia coal price set new all-time record on September 5, with per tonne traded at $457.80, according to Trading Economics, a popular online site for data on economic indicators. The previous all-time record of $435 a tonne was set in March, according to the online site.
The surge in coal demand was forecast for Europe with a 7 per cent increase and for India with a 10 per cent increase in 2022 in the fallout of Russia-Ukraine war.
Currently, the demand for the commodity often dubbed dirty energy for its environmental and health impacts was very high for nations in Europe as well as in Asia such as Japan storing it for tackling increased energy demand in winter and summer.
Compared with the previous year, Trading Economics data showed that Asia coal price jumped by more than 157 per cent following a 23 per cent rise in its price in August and over 5 per cent increase between September 4 and 5.
The coal price is likely to hit $500 a tonne next year as the current energy crisis partly triggered by the Covid-19 pandemic is expected to continue through 2026, according to the Energy Intelligence.
Bangladesh’s foreign reserve is forecast to continue to decline through December because of high energy import cost. The continued surge in demand and the price of coal threaten to further increase inflation.
A tonne of coal which is usually traded at below $100 fell to just $39 on September 1 in 2020, one of the lowest prices ever.
The cost of generating electricity from coal almost equaled furnace oil electricity cost in financial year 2021–22, according to the data from the state-owned Power Development Board.
Each unit of electricity generated from coal cost Tk 16 in 2021–22, just Tk 1 less than the production cost of electricity from furnace oil, the PDB data showed.
In FY21, a unit of electricity from coal cost just over Tk 8.
Coal was imported at about $200 a tonne in the previous financial year, according to a PDB official.
Bangladesh’s proven coal reserve is some 313.9 crore tonnes, with roughly one million tonne extracted annually; about 65 per cent of which is used for electricity generation while the rest goes to brick fields and other uses.
The domestically extracted coal is not enough to generate power even half of the PDB’s 525MW capacity.
Coal now accounts for 8 per cent of Bangladesh’s installed generation capacity of 25,700MW.
(NA)
